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NLMK Group announced the launch of its new Strategy 2022. Strategy 2022 targets net gains of +USD 1.25 billion to EBITDA pa, with USD 0.5 billion pa from operational efficiency programmes that require no additional capex. Strategy 2022 is based on enhancing NLMK Group’s competitive advantages. Through operational efficiency initiatives and investment projects, as well as debottlenecking our steelmaking operations, steel output at our Lipetsk site will increase by 1 million tonne. Steel output growth will be 100% covered by captive iron ore from Stoilensky. Added steel output will be sold in the form of premium and niche HVA products. Target growth in sales of HVA products will total 1.7 million tonne, driven by investment into the Group’s rolling operations in Russia, Europe and the US. As part of its strategic goal on sustainable development, NLMK will continue to execute its target programmes aimed at reducing its environmental footprint, improving occupational health and safety, and reducing the injury rate.
Strategy 2022 goals
1. Leadership in operational efficiency
Focus on operational efficiency and approaching best production practices
Global leadership in cash cost of steel production
Target EBITDA gain: USD 0.5 billion pa
2. Growth in low-cost steel production
Growth of steel output at NLMK Lipetsk by 1 million tonne to 14.2 million tonne
100% self-sufficiency in iron ore maintained through growth of concentrate output by 2.6 million tonne to 20 m million tonne; and growth of pellet output by 1.3 million tonne to 8 million tonne at Stoilensky
Growth of NLMK Lipetsk energy self-sufficiency from 60% to 95%
Decrease in coal consumption, including deficit grades
Target EBITDA gain: USD 0.3 billion pa
3. World-class sales portfolio
Growth of steel product sales to 18 million tonne
Growth of premium product output and sales by 1.7 million tonne
Growth of sales in key ‘home’ markets by 2.7 million tonne
Target EBITDA gain: USD 0.45 billion pa
4. Leadership in sustainability and safety
Minimization of environmental footprint, including a reduction of specific emissions per tonne of steel at NLMK Russia to the level of best available EU technologies
Reduction of injury rate to LTIFR** 0.5
High level of personnel motivation and engagement
Mr Grigory Fedorishin, NLMK Group CEO and President, said “Strategy 2022 is marked by high resilience to external market factors, being based on enhancing the Company’s competitive advantages: low cash cost, efficient vertical integration, product mix diversification by product and by market, and a high level of production and sales localization. NLMK’s new Strategy is balanced across operational and investment gains: our target operational efficiency gains are of the same magnitude as our target gains from investment projects. The new Strategy is also well-balanced in terms of capital allocation: NLMK invests in growth projects while maintaining its financial stability and adhering to a highly competitive dividend policy. As part of Strategy 2022, we will continue to work on maximizing stakeholder value.”